Hi all..

i would like to ask some question. this is about rental money for a commercial shoplot. assume, theres a tenant they are paying rent for 1st floor shoplot to do business. the contract is 3 years period, after 3 years period has ended

i would like to tell them from now on each year the rental about rise about 3.5% a year based on the inflation rate. is it fair to do so?

for eg:

Period : 1 - 3rd year
amount : RM1k per month

1 year = RM12k

2nd year = RM12k

3rd year = RM12K



then from next year onward would rise around 3.5% based on inflation rate.

4th year = RM12k x 3.5% = RM420
amount needed to pay for 4th year would be : RM12, 420 (per month would be RM1035)



then on 5th year = RM12,420 x 3.5% = RM434.70
amount needed to pay for 5th year would be : RM12,854.70 (per month would be RM1071.20)


6, 7, 8, 9, 10 year.. etc etc..

the rental just keep compounding year by year with 3.5%. and do you all think this is acceptable and logic? would tenant will be angry with this kind of terms and condition? please comment/advice

Always price your property base on market rate if you don't want high vacancy rate. Ask a reputable agent would get you the answer.

raise rental is ok

but not the way you do it,

what you should do is to reflect your desired collection amount and then spread it out in a contract, for example a 3 years contract, you want to collect

$12,420.00
$12,854.70
$13,304.61

on 4th to 6th year. total is $38,579.31

so you want to collect $12,859.77 a year or $1,072 a month instead of the normal $1,000

hope this helps